The House has introduced legislation to amend the Tax Code to modify the penalty on the understatement of taxpayer's liability by preparers.
The bill, H.R. 4318, was introduced by Joe Crowley, D-N.Y., and co-sponsored by Jim Ramstad, R-Minn. The bill fixes a provision added to emergency spending legislation passed by Congress in May. That provision, in the Small Business and Work Opportunities Tax Act of 2007, amended Section 6694 of the Tax Code and would have required a major change in how CPAs represent taxpayers by raising an IRS reporting standard for preparers to a level of certainty higher than taxpayers must meet, creating a potential conflict of interest between preparers and their clients. The IRS has delayed implementing the law.
The American Institute of CPAs and other accounting organizations have complained that the law was passed without an opportunity for hearings or public comment. H.R. 4318 corrects the law by equalizing the IRS tax return reporting standards for preparers and taxpayers.
"This bipartisan legislation will end the potential conflict between the tax preparer and the taxpayer, and it will reduce the paperwork backlog that prevents taxpayers from claiming deductions or credits," said Crowley in a statement.
The AICPA praised the bill. "Rep. Crowley's introduction of the bill demonstrates his commitment to America's taxpayers and their right to representation by their tax preparers," said AICPA president and CEO Barry Melancon in a statement. "This is a big issue for practitioners and we also very much appreciate Rep. Jim Ramstad's leadership on this issue and his co-sponsorship of the bill."
The New York State Society of CPAs also urged passage of the bill. "We hope Congress will act swiftly to maintain the integrity of the tax system and relationship of preparers and taxpayers before the end of the year," said NYSSCPA president David Lifson in a statement.
